By Maximilian Clarke
Retailers are eagerly awaiting George Osborne’s Autumn Statement as an opportunity for government to return much needed confidence to the retail sector to boost growth.
Top of retailers’ wish list is a VAT cut to to 17.5% to ease pressure on consumers’ wallets.
“For the British economy to start growing it is absolutely vital confidence returns,” said Kevin Flood, co-founder and CEO of social retailer, Shopow. “With conditions still fragile on Britain’s high street, cutting red tape and freezing the proposed fuel duty rise could get consumers spending and give the retail sector a necessary boost. The Government needs to review its decision on VAT. A temporary cut in VAT would help give consumers confidence to get out and spend.”
This is, however, highly unlikely given the cost of cutting VAT. A 2.5% drop would cost in excess of £1.08bn a month at a time when curtailing the deficit in order to retain the UK’s stable macroeconomic outlook. Others, including the New Statesman’s George Eaton, argue the boost in confidence it would bring would trigger more spending, yielding greater tax revenue to the point the cut would pay for itself.
Last week’s concerning official figures published by the Office for National Statistics paint a worrying economic picture for the retail and distribution sector. The figures were followed by a warning from the British Retail Consortium that the ONS were in fact painting a far rosier picture than they were hearing from their members.
Join us on